According to Citi, PCU fits their current recommended profile of low cost miners with strong balance sheets. They had listed PCU as a Sell with copper at $3.75/lb given huge downside potential.

This scenario has unfolded ($1.85 copper, PCU down 74% from peak) and upside now outweighs downside.

5 reasons to buy:

#1: The Worst Is Over For Copper — Industry studies suggest that $1.70/lb is the 90th percentile on the copper cost curve, i.e. less than 10% below current prices. This is where copper has settled during previous global recessions.

#2: Structural Shortages Not Resolved — Copper is Citi's preferred base metal given structural supply constraints. The price was $4/lb only six months ago.

#3: High Quality Assets + Good Balance Sheet — PCU has the lowest cost mines and the highest reported reserves of any major copper producer. The company has almost zero net debt with over $1.1b in cash.

#4: Buy Ahead of Strike Settlement, Not After — They cannot predict a timetable for ending the painful strike at PCU’s Cananea mine. Yet, this will eventually boost annualized EPS by 40%+ and is a positive catalyst in waiting.

#5: Low Valuation — PCU trades at 11x 2009 on “trough” copper and strikelimited production. Valuation is 5-7x on estimated mid-cycle EPS of $1.50-2.00, below fair value of 10-12x.

Notablecalls: I'm calling this one Actionable here below $13-$14 level

This call has it all:

- Beaten down stock, yet not your average inst. favorite.

- Low valuation (5-7x on estimated mid-cycle EPS)

- Catalyst ahead (Strike Settlement)

Will trade closer to $14-$15 level today.